Report: JPMorgan Paid $115M in Legal Fees for Former Frank CEO Charlie Javice and Co-Defendant Olivier Amar
By the 91pornWhistleblower Team
We have been reporting on the high-profile securities fraud case involving Charlie Javice, the former CEO and founder of Frank, a startup that helped students with financial aid, and her former colleague Olivier Amar. (More about the case here.)
It was recently reported that JPMorgan, which acquired Frank for $175 million and was a victim of the fraud that led to the convictions of Javice and Amar, was on the hook for the defendants’ legal fees of $115 million.[1]
Court Decision Ordering JPMorgan to Cover Legal Fees
Years ago, after the fraudulent scheme unraveled and JPMorgan fired Javice and Amar for cause, the duo sued JPMorgan in the Delaware Court of Chancery, seeking an order requiring JPMorgan to pay their legal fees and expenses in connection with the fraud investigation and resulting litigation. The claim by Javice and Amar sounds brazen, but they based it on the language of the merger agreement and corporate bylaws. In 2023, the Delaware court held that based on its interpretation of those documents and Delaware law, Javice and Amar were entitled to advancement of their legal fees and expenses.[2]
Mounting Litigations and Legal Fees
In 2023, the DOJ brought a criminal case against Javice and Amar, which resulted in convictions of the defendants. Last month, the court sentenced Javice to prison for securities fraud and other violations, ordered her to forfeit over $22.3 million, and ordered Javice and Amar to pay over $287 million in restitution.[3]
According to reports and documents filed with the court, the tab for the legal fees was $115 million. To put that in perspective, that’s more than 65% of the $175 million JPMorgan paid for Frank. Per reports, Javice had a team of at least 19 lawyers and Amar at least 16, not to mention paralegals and support staff. Judge Hellerstein, who presided over the criminal case, included those legal fees in his restitution order, although Javice recently filed a motion requesting that the court reconsider that order.[4]
That’s not even the end of it. Javice already indicated her intention to appeal her conviction, which will result in more legal fees. Moreover, in addition to the criminal case, JPMorgan and the SEC also brought civil cases against Javice and Amar. Those civil cases were put on hold pending the resolution of the criminal case. Those civil cases will likely result in even more legal fees.
The Role Whistleblowers Play in Stopping Fraud
Whistleblowers are critical to identifying and reporting fraud. The SEC’s Whistleblower Program encourages individuals with knowledge of violations of U.S. securities laws to report that information to the SEC. Under the program, eligible whistleblowers who share information that leads to a successful SEC enforcement action may receive up to 30% of the money collected.
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Sources:
[1] United States v. Javice, 23-cr-251 (S.D.N.Y.), Sentencing Memorandum of the United States, ECF No. 419, at 42; see also ; .
[2] See Javice v. JPMorgan Chase Bank, N.A., No. 2022-1179, 2023 WL 4561017, at *1 (Del. Ch. July 13, 2023).
[3] See .
[4] United States v. Javice, 23-cr-251 (S.D.N.Y.), Sentencing Memorandum of the United States, ECF No. 419, at 42; United States v. Javice, 23-cr-251 (S.D.N.Y.), Javice’s Motion for Reconsideration of Restitution order, ECF No. 438, at 1; see also ; .
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